Editorial: Not in the public interest

The same public entities that hand out tax breaks are asked to fund an anti-reform lobbying effort.

THE STAKES:

These public entities should be working in the public interest, not against it.

New York state and its many local governments hand out an estimated $8.6 billion a year in tax breaks in the name of economic development. With that much money going out the door in one form or another, taxpayers ought to at least know what they're paying for.

Yet that very notion seems to worry the people who make their livings off this massive giveaway, so much so that they've mounted a lobbying effort to counter it. And they're asking some of the same public entities that hand out tax breaks to use some of their money — public money, that is — to push back.

The arrogance of that is stunning.

The idea comes from the New York State Economic Development Council, a not-for-profit group that represents some 900 industrial development agencies, local development corporations, banks, underwriters, bond counsels, chambers of commerce, private corporations and other public and private entities. Last month, it asked local IDAs to chip in $500 to $2,500 each toward a lobbying effort against IDA reforms under consideration in the state Legislature.

Those reforms include banning IDAs from giving incentives to projects already under construction or in which the developer is not identified, and requiring school districts to be involved in payment-in-lieu-of-t-axes (PILOT) agreements.

Through tax exemptions alone, New York's 109 IDAs allow businesses to forgo paying more than $630 million a year, according to the state comptroller's office — money that other taxpayers have to make up to cover the cost of government. That's part of an estimated $4.2 billion that local governments spend on tax breaks, grants and other incentives, plus another $4.3 billion from the state, according to the Citizens Budget Commission.

For an example of how these deals affect communities and taxpayers, the Legislature has only to look out its window to Rensselaer County, where Empire Generating Co. wants to renegotiate a PILOT originally worked out in 2007 for its power plant on the former BASF site. Citing unspecified financial issues, Empire wants to cut a $21 million PILOT bill over the next decade to $10.4 million. That means less money for the county, city, school district and town of East Greenbush. The city school district warns it may have to dramatically raise taxes.

Government watchdogs have for years called for more accountability in the state's array of economic development programs, and episodes like this underscore the need for the public to know far more than it does whether there is a real need for these giveaways, or if they're just fattening some company's bottom line. The Empire plant was apparently an attractive enough prospect to be sold to new owners in 2016, among them a major Japanese conglomerate.

And while state lawmakers are at it, they might consider the insult of public entities like IDAs using public funds to lobby against the public's interest. Sounds like a practice overripe for reform.